PRüF improvement Proposal PIP170–171

Regarding decentralized operation of PRüF nodes, staking, crowdsourced funding, and decentralized node governance

Using the PRUF_DEFI contract currently under development, PRüF nodes can be launched under a distributed model, allowing stakers to underwrite, determine governance, and share node payouts from DeFi based nodes (dNodes).

Potential dNode founders would call the “new_node” function, and place the initial stake to create a new node. dNode creation is incentivized by giving the founding staker a fixed percentage of node — generated PRüF, up to a specified maximum*. In addition to this percentage, they will be given a permanent stake share equal to the node founding cost.

The dNode founder may also be a co-op contract that allows distributed funding or crowdfunding for the node. This capability is planned for the second phase of dNode rollout

The stake required to execute this function would be a significant fraction of the initial cost normally associated with node creation and provisioning, and will be non-refundable. dNodes will automatically be provisioned for 100% share (PIP171).

dNode founders would define the namespace, root asset class, and default price structure for the dNode. dNode founders would then presumably publicize or implement the node using a web portal or other network interface.

Once established, anyone with PRüF tokens can stake on the dNode, in any amount. The proportion of their stake to the total stake pool for that dNode determines the share of the revenue generated by the node that they will receive. Because of the potentially wide scope of payees, dNodes will batch payouts using a pull-payment pattern.

As an example:

Bob founds a dNode for widgets. Bob is entitled to a 10% share as founder, and holds a ü250,000 founding stake. Jane stakes on the “widgets” node for ü500,000. Jeff stakes ü100,000. The total stake pool is then ü850,000.

If the node generates ü10,000 in a transaction, Bob will receive ü1000 as his founders share. Of the remaining ü9000, Bob will also receive 25/85 (250,000/850,000) for his stake, Jane 50/85, and Jeff 10/85.

Over-staking is disincentivized by the locked opportunity cost of staked funds, tending to keep total stake pools near an “ideal” ROI and keeping staking accessible to smaller stakers. Staking periods will be defined in Epochs, and only stakes established for the entire epoch will be eligible for share payment.

Governance of node price and namespace parameters is managed by a “node admin” which allows an address with that role to make changes to the node configuration. This role will be held by the node founder by default, but may be designated. If designated, it may be controlled by a governance contract. An optional Default governance contract will be provisioned as part of the third phase of dNode rollout. Decentralized governance is key to the staking mechanism, as the main value added to the dNode comes from interested stakers determining the best governance for the node.

Because of the extensible nature of the PRüF contract infrastructure, Implementation of the PRUF_DEFI contract will require no special functionality and will operate as a wholly separate “node operator”.

It is also possible for additional 3rd parties to independently implement similar implementations, with variations tailored to unforeseen use-cases.

With community staking, delegateable governance, and cooperative founding, dNodes will provide a truly decentralized, community driven model for PRüF node operation that can exist alongside or as an alternative to more centralized solutions.

Phase 1 — completion, testing, and audit of PRUF_DEFI.

Phase 2 — implementation of cooperative node founding

Phase 3 — implementation of distributed stakeholder governance

*system-wide distributed governance control point required for this parameter