Introducing the pNetwork & PNT
The heartbeat of cross-chain composability
Phase 0
In its initial stages of development, pTokens have been backed by a single validating node. Following the successful mainnet launch of pTokens, we are confident that our solution is robust and will continue to make its mark among the DeFi industry.
In this initial phase, the pTokens system is underpinned by Trusted Execution Environments (TEE) to give transparency guarantees around the status of the validating network. The secure enclaves where pTokens bridges run can ensure at any time the integrity of the node, and guarantee a secure and fully auditable execution of all minting and redeeming processes.
Going forward, this solution will still be used as additional protection, yet it will be paired with a security-oriented decentralized approach. In fact, we are upgrading this system, introducing a new governance model based on a progressive decentralization approach.
Learn more about pTokens — read about the pBTC on Ethereum launch in Coindesk, or the pBTC on EOS launch in Cointelegraph.
pNetwork architecture and progressive decentralization
Following its kickoff, the pTokens system will undergo a series of upgrades to achieve a fully decentralized network of validators, the pNetwork, where multiple operators (namely, validators) will ensure there is no single point of failure.
A first upgrade of the pTokens system will happen in a few months and it will introduce this network of validators. The pNetwork will be launched as a permissioned network, that will then evolve into a permissionless one. It is an open, public and independent network with an in-built governance system.
Validators are node operators having special signing capabilities — these are an essential component of the network as they validate the asset switch from one blockchain to another (peg-in and peg-out) in a secure and decentralized fashion. Validators can cooperate and perform the cross-chain movement of assets after they have all verified independently the external blockchains’ conditions.
The first pTokens upgrade will open the system to a set of known parties, who will operate on the network as validators. Ultimately, the pNetwork will reduce the control the development team has over the project.
Further upgrades aim to achieve full decentralization, making the pTokens system an open network which anyone can be part of. It’s a permissionless network where a Multi-Party Computation (MPC) algorithm is jointly used by validators to reach consensus, power its computations and perform all peg-in and peg-out procedures.
This cryptographic algorithm allows a scalable number of parties in the network to run their computations collectively — MPC is used to enable the distributed signing (via a threshold signature scheme) of peg-in and peg-out operations among the network validators.
Another fundamental feature of MPC is its ability to preserve certain security properties, even if some of the parties collude and maliciously attack the protocol.
The upgraded structure makes use of Trusted Execution Environments (TEEs) as an extra protection shield. A TEE is a secure sandbox that provides security features, guaranteeing the code and data loaded inside to be protected and remain confidential.
Multiple TEE techniques are employed to safeguard the generation and management of the key-pairs used by the pTokens bridges. This benefits the entire system by making it more secure — for example, sybil attacks are made drastically more expensive thanks to the use of multiple TEEs (where different isolation techniques enforce the execution of the exact code the network has agreed on).
As the underlying architecture for pTokens, the pNetwork provides the foundation for a truly decentralized system, and is in fact, a realisation of its progressive decentralization aims. This network is also an improvement over the initial model as it strengthens the security of the pTokens’ bridges, while minimising various risks, as the network is supported by multiple parties.
Governance, and the introduction of the pNetwork DAO
Upgrades of the pTokens system outlined in the previous section pave the way to a more decentralized and community-governed system.
In its initial phase, the pTokens bridges are governed and operated exclusively by the development team. This facilitates the set-up and speeds up the preliminary stages of the project. The pNetwork is a key element powering the switch to a more open system, where the governance of the pTokens bridges is passed over to the hands of the community.
For the system to become truly decentralized, community participation is key. People can contribute to the success of the project by assuming an active role in it. Specifically, they can decide to operate a validating node or help shape its future by voting on pTokens improvement proposals via the pNetwork DAO (more on this below).
Validators grant the peg between pTokens and their corresponding underlying assets by validating all token switches (peg-ins and peg-outs) from one blockchain to another. As a comparison, their role within the network is as essential to that of a miner within a proof of work blockchain. Whereas miners secure and verify transactions to secure the blockchain and its continuance, validators secure and verify the cross-chain movement of assets.
Anyone can be a validator and contribute to making the network effectively decentralized, withdrawing control from the development team. Economic upsides are given to validators as a reward for performing a fundamental role within the network. Peg-in and peg-out fees are paid to the network of validators for each cross-chain transfer and they are equally redistributed among validators.
Along with the network, a Decentralized Autonomous Organisation (DAO) will be introduced to the system with the aim of reducing, and then completely removing, the control of the development team.
Members of the DAO will initiate voting processes to influence the development and future of the pTokens system. A series of Improvement Proposals (IPs) will be advanced by the development team on multiple pTokens related matters. DAO members will be called to vote and decide whether or not to approve the IPs. For example, members are responsible for electing which pTokens bridges to develop and support next, deciding on the fee mechanism of the network and resolving any upgrade proposals.
Anyone can become a DAO member and contribute in making the network effectively decentralized, assuming an active role for the success of the project.
DAO members and validators within the network represent the keys to its decentralization, capturing the essence of these concepts pioneered by the DeFi movement.
Token economics
A pNetwork token (PNT) will be introduced to the system as a way to implement community-lead governance and as an incentive for actors within the network to perform their roles.
The PNT token represents a key element of the system as it aligns incentives for all participants. In fact, PNT is leveraged internally by the pTokens system to enable operations for both validators and DAO members.
The flywheel effect is triggered by the need for validators and DAO members to hold and stake PNT tokens in order for them to perform their respective roles.
Prospective validators need to stake a minimum amount of PNT tokens (200K PNT), which is then used to show their commitment and serves as a bond. Such a role creates a potential economic benefit for validators, who are rewarded for their work with the peg-in and peg-out fees collected by the system. Should a validator operate maliciously, it is punished by the system by losing tokens at stake. On the contrary, when operating remarkably, validators get back tokens at stake at the end of the validator’s life cycle.
Validators guarantee a more stable and quality service, contributing to more attractive pTokens bridges for users. Increased adoption and usage of pTokens causes higher fee generation to be redistributed to validators, hence increasing the incentive for them to keep operating within the network. Fees are collected in terms of the assets which users transfer cross-chain. Such a model prevents the PNT token from becoming a burden for users as adoption grows, while letting validators collect their rewards in the form of a unique asset.
During the initial stages of the project, an additional economic incentive is introduced to the system to encourage active participation within the DAO while the system gains organic traction. While at stake, PNT tokens mature an overall 63% interest over two years. Such interest is matured based on the tokens at stake, making rewards higher for those members who are more invested.
The interest is split across the two-year period, granting a higher reward during the first year (42%) and transitioning to half that rate (21%) during the second year. Up to 28.35M PNT tokens are dedicated to this initiative, which are generated through an inflation mechanism that grows the initial 60M PNT supply proportionally to the tokens actively staked within the DAO and redistributes them to the community.
Active participation within the DAO leads to a more attractive pTokens system, growing the number of users for the pTokens bridges. This also achieves a higher level of decentralization as the governance is in the hands of the community.
Check out the pNetwork Litepaper on p.network to dive deeper into the topics introduced above.
More details on the PNT token will be released next week.
Provable and Eidoo; the birth of PNT
Provable Things and Eidoo are sister companies whose teams work closely together to excel at the forefront of blockchain innovation.
Thanks to their complementary expertise and cohesive technologies, they are contributing to the development and growth of the decentralized financial industry.
The pTokens project not only represents a new paradigm for both Provable Things and Eidoo, but for the whole DeFi ecosystem. The effective and frictionless cross-chain movement of assets is helping to unlock liquidity in the market and push DeFi beyond its current boundaries.
In a collaborative decision, Eidoo’s native EDO token will be upgraded and effectively transformed into PNT so that it can be leveraged within the pNetwork ecosystem, playing a fundamental role in its maintenance.
How it works —upgrading EDO into PNT
A date for the token upgrade is agreed with all partners and communicated to users. On that date, EDO deposits and withdrawals are stopped on exchanges. This enables the team to take a snapshot of all Ethereum addresses holding EDO tokens and proceed with a PNT airdrop.
All EDO holders receive a 1:1 PNT airdrop. PNT tokens are automatically visible on Ethereum wallets. Exchanges receive PNT tokens on behalf of their users and consequently transition their user’s balance from EDO to PNT. The utility and value of EDO is transitioned to PNT.
This new use case for the EDO token will enhance its utility as it becomes fuel for a larger range of services.The EDO token is already used for a range of utility-driven purposes within the Eidoo platform and will continue to do so.
Learn more about the Eidoo ecosystem here.
Looking forward
In the upcoming months, the following 3 steps will be implemented to introduce PNT to the system:
- PNT is issued on Ethereum. The pNetwork Token (PNT) will initially be issued as an Ethereum token, following the ERC-777 token standard (backwards compatible with ERC20).
- The DAO is introduced. The PNT token will provide voting rights within the pNetwork DAO. As the DAO will govern decisions relating to pTokens, this will boost the decentralization of the system. Anyone holding PNT will be given access to the DAO and are able to participate in voting via a staking mechanism. The circulating supply of PNT, when launched as a governance token, will be approx. 60 Million. That’s 60 Million tokens distributed across more than 7000 addresses, making it one of the most robust and largest DAOs in the DeFi space.
- PNT staking for validators is enabled. PNT can be staked within the DAO for validators to start operating.
pTokens had a successful mainnet launch on both Ethereum and EOS chains, with a number of integrations already onboard. This includes industry-leading liquidity providers Kyber and Bancor Networks, Uniswap v2, DMex, Eidoo, and the EOSDT stablecoin by Equilibrium. Other platforms are performing seamless integrations so that peg-ins and peg-outs can be made straight from their interface. Examples include Bitfinex and Eosfinex.
With Eidoo being integrated from Day One, it will be very convenient for its own users to access and use pTokens, such as pBTC. We expect this user base to drive its initial growth.
That being said, the pNetwork, pTokens and Eidoo audiences (and their respective marketing initiatives) are expected to be different and will evolve independent of each other, all the while bringing benefits to the pNetwork and its PNT token.
🦜 Want to join our flock? Connect with us on Twitter and join the conversation in our pNetwork Telegram and Discord.
💡 For a more technical deep dive into pTokens infrastructure, read our technical paper or check out the summary on our website.
🔗 For any blockchain project looking to integrate pTokens into their infrastructure, we have also built a pTokens JS library.
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